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IFC proposes new ways to share spectrum in telephone industry

Monday January 25 2016

Airtel Kenya CEO Adil El Youssefi during a media engagement announcing mobile banking partnership between National Bank and Airtel on January 13, 2015. Airtel has asked the communications authority to commit Safaricom to an agreement that will force it to share its high speed fourth generation frequency with competitors. PHOTO | DIANA NGILA | NATION MEDIA GROUP

In Summary

The World Bank’s investment arm the International Finance Corporation has proposed a Public Private Partnership approach towards the allocation of spectrum in the telecom industry.

IFC states Kenya’s lack of a market-oriented process for assignment could become a challenge in the distribution of available free spectrum.

The World Bank’s investment arm the International Finance Corporation has proposed a Public Private Partnership (PPP) approach towards the allocation of spectrum in the telecom industry.

Through the report, unlocking growth potential in Kenya, the IFC states that the country’s lack of a market-oriented process for assignment could become a challenge in the distribution of available free spectrum.

Safaricom, for instance, signed a Sh15 billion security deal with the government in exchange for the fourth generation radio spectrum in the 800MHz band as part of the agreement.

This has, however, sparked protests from rivals Airtel Kenya and Telkom Kenya which say the deal was unfair.

VALUABLE SEROURCE

The IFC report, which was commissioned by the Competition Authority of Kenya (CAK) following an earlier directive by President Uhuru Kenyatta, proposes a fair approach to allocation of the valuable resource.

“In the future, a more structured and predictable process as part of Kenya’s PPP framework is advisable. The private partner should be competitively selected in an auction to guarantee that government’s contribution to the deal does not go to waste,” the report released last week Wednesday states.

It points out that Public Private Partnerships (PPP) have the potential to affect competition by strengthening the private partner’s position in the market and this should be considered when designing an agreement.

SHARING 800MHz BAND

At the moment, the Communications Authority of Kenya (CA) is proposing the sharing of the 800MHz band spectrum among the three operators saying that the alternative spectrum is not ready for distribution.

“We are negotiating with Safaricom so that they can share the same spectrum, taking the bulk of it with the rest shared among the two other operators,” said Communications Authority Director- General Francis Wangusi last week.

Mr Wangusi said the authority’s board has to approve the new arrangement, after which the ICT ministry will be consulted to approve the request.

Already, Airtel has asked the communications authority to commit Safaricom to an agreement that will force it to share its high speed fourth generation frequency with competitors.

CA in a gazette notice last year, said it would issue Safaricom with a licence allowing it to operate in the 800MHz frequency band and begin earning from the high speed Internet.

“Our position is that Safaricom should not be allowed to launch commercial services in the 800 MHz spectrum band before the sharing agreement is approved by the regulators and signed with the other operators,” said Airtel chief executive Adil El Youssefi in an earlier statement.

The IFC has now recommended in its study that CA should lead in designing a spectrum assignment mechanism that boosts competition in the sector.

“CA should work with CAK in carefully designing any tender for mobile spectrum assignment getting input to support a pro-competitive process,” states the report.